KenGen signs Sh709 million geothermal deal in Djibouti

The Kenya Electricity Generating Company (KenGen) #ticker:KEGN has signed a Sh709 million contract to drill three geothermal wells in Djibouti.

The deal signed between State-owned power producer and Djiboutien De Développement De lenergie Géothermique (Djiboutian Office of Geothermal Energy Development) (ODDEG) will see the firm export its expertise in the field, the third such deals in the region.

The Kenyan delegation led by Energy Cabinet Secretary Charles Keter and KenGen Managing Director Rebecca Miano has been in Djibouti since Tuesday for the signing ceremony which took place earlier on Thursday.

The deal will see the Horn of Africa country benefit from KenGen's experience and expertise, which has so far drilled more than 300 wells within the Olkaria field.

Kenya has a geothermal energy potential of 10,000MW but just under 1,000MW has been successfully exploited.

Through KenGen, the country hopes to offer more commercial drilling services, geothermal consulting and other energy-related services across Africa.

According to Ms Miano, KenGen’s diversification strategy of leveraging its expertise in the field will record a major success when the three wells become productive and enhance Djibouti’s efforts towards growing its energy production.

“It is therefore our desire that in the next couple of years, we shall have considerable presence in countries within the continent. It is also worth noting that we are not only keen on increasing our presence in Africa, but also enhancing energy capacities across the region,” Ms Miano said.

This is the third geothermal drilling contract that KenGen has won in Africa. In October 2019, the company secured a Sh5.8 billion contract to drill 12 geothermal wells in Ethiopia. The contract with an independent power producer includes installing a water supply system and equipment.

In February 2019, KenGen won yet another contract for consultancy services and drilling geothermal wells. The contract is worth $76,801,344 (about Sh7.6 billion).

It has also developed partnerships with countries such as Ethiopia and Rwanda in renewable energy development.

Energy Secretary Keter said African countries share the common aspiration of delivering electricity to their people, making such collaborations important in meeting the continent’s energy needs.

“The biggest challenge has remained access (to electricity) in remote areas, and in Sub-Saharan Africa with 573 million people not having access to this important commodity. Although energy access policies have continued to bear fruit, with 2019 data showing tremendous progress, we have seen the coronavirus pandemic reverse the gains. We can only remain optimistic that things will change in 2021,” Mr Keter said.

Kenya, which rolled out its universal electricity access plan in 2018, is expected to connect all households by next year, a plan that has been dragged by the Covid-19 pandemic and which may have to wait longer.

The CS said the country had made remarkable progress in increasing access to electric power as a result of deliberate government efforts and private sector investment.